DENVER – Gov. John Hickenlooper on Tuesday proposed reductions to key government services as part of his $28.5 billion budget request to lawmakers.
The governor’s office also proposed new programs with the help of $16.3 million from marijuana taxes, which would be used for affordable housing, homes for those with behavioral health needs and combating homelessness.
The administration also would like to set aside $16 million in marijuana revenue for initiatives to curb the so-called “gray market,” in which people exploit loopholes in marijuana legalization to grow and sell large quantities of marijuana underground. The money would be spent on criminal justice and behavioral health services.
Henry Sobanet, the governor’s budget director, said the proposals for marijuana money are in line with Hickenlooper’s goal of only using marijuana taxes for related issues.
The total 2017-18 fiscal year budget would represent an increase of 3.3 percent, with a 3.7 percent rise in discretionary spending, bringing the General Fund to $10.9 billion.
It comes with a few bright spots, including offering a 2.5 percent across-the-board pay increase for state employees.
To achieve balance, however, reductions in some services are needed.
“It was clear that the auto pilot scenario was not one that we could just let happen,” Sobanet said.
The balancing measures come as the state faces more than $926 million in new demands on the General Fund in the 2017-18 fiscal year, with only $426 million in anticipated new revenue. The governor’s budget office was forced to identify $500 million in savings.
Many of the fights will mirror discussions from the last legislative session. Lawmakers will craft a state budget based on the governor’s request, and then debate it in April.
A familiar proposal calls for eliminating taxpayer refunds by reducing collections of the Hospital Provider Fee, which is assessed on hospitals to force a match of federal health-care dollars.
Maximum allowed collections of the fee would be reduced by $195 million, thereby eliminating taxpayer refunds prescribed in the Taxpayer’s Bill of Rights. The fee helps trigger refunds by contributing to TABOR calculations.
Education also will see some wrangling. After reducing the K-12 education “negative factor” by nearly $181 million over the past four years, the governor’s office is proposing increasing the gap in fully required education funding by more than $45 million.
The “negative factor” is a shortage in K-12 state funding caused by the conflict of two constitutional amendments.
The proposal is sure to cause a stir in the Legislature, as education stakeholders and lobbyists will fight for officials to continue to chip away at the negative factor.
The governor’s proposal increases average per pupil spending by $182. But it would require an additional $52 per student to keep the gap flat. The shortfall in funding would increase to $876 million in the fiscal year that begins in July.
Transportation also would see a reduction from anticipated spending. The governor’s office proposed legislation that would reduce statutory General Fund transfers to roads and highways by $79 million in the current fiscal year and $30.3 million in the upcoming year.
Roads and highways were expected to receive around $158 million in the current year and $109 million in the upcoming fiscal year.
Hickenlooper’s office also proposed cash transfers to achieve balance, including taking $46.9 million from a fund that collects unspent state salaries, and using $15 million in marijuana taxes to support K-12 funding.
Part of the problem faced by budget writers is that revenue expectations for the current fiscal year dropped. Lawmakers are expected to dig into the current budget reserve by more than $180 million to fully fund this year’s budget.
The governor’s office also is proposing taking $31.7 million from local communities to backfill the discretionary fund, leaving only $25.8 million in severance taxes for local governments.